David Schwartz, Ripple’s Chief Technical Officer and one of the XRP creators, has recently responded to the increasing controversy surrounding Tether in Bitcoin and other markets. These concerns are based on the allegations that Tether manipulates the cryptocurrencies’ prices and supports the US bond market via its USDT stablecoin.
The critics argue that Tether has cycled between being Tether, Bitcoin, and the U.S. bond market. They point out that by providing fake liquidity, Tether funds what some people claim is the biggest bubble in financial history. This argument links Tether to Bitcoin, arguing that if bonds fail, Bitcoin can fail because of this intertwined system.
Tether Reserve Composition Raises Eyebrows
According to the information available in Tether’s latest data, all its tokens are anchored at a 1:1 ratio to the respective fiat money and backed by Tether. These reserves include cash and cash equivalents, U. S. Treasury bills, precious metals, and Bitcoin. However, the content of these reserves has been a source of concern, especially with “T-bills” forming about 80% of cash equivalents.
Due to these considerations, Schwartz illuminated the foundation of financial systems. He said that buying new things like Bitcoin, creating Tether, or simply opening a bank deposit increases the total value of things without reducing the value of the other stuff. To this end, Schwartz wanted to explain how newly created money adds to the total asset base and does not reduce the existing ones.
Schwartz’s comments seek to clarify the ongoing debate about Tether’s influence. Instead of focusing on the negative aspects of asset creation, as his critics do, he shares his vision based on the principles of asset generation. His explanation leaves the impression that including new assets such as USDT benefits the financial system but does not have a negative impact.
While different experts are discussing the effects of Tether on the results of financial operations, Schwartz gives another perspective. Thus, all their criticisms and negative comments on artificial liquidity and financial bubbles are countered with the fundamentals of asset creation and value addition. This debate will continue to foster and remain critical to the cryptocurrency and economic discussion.
